Every parent wants their kids to get the best education in best of schools. They want them to grow up and pursue a good career with a lot of prosperity. Well, during school age, parents often forget to teach their children financial responsibilities wherein it is important to know how to save money.
If you think you missed on teaching them, you can follow these tips.
How To Educate Your Child About Money Maintenance
Talk directly about money
When you talk to your kids about money, it removes the mystery and helps them make smart choices. It might initially feel awkward, but don’t let your uneasiness cause you to miss opportunities to teach important lessons and don’t be afraid to talk about the bad along with the good.
Lead by example
We can’t just say what we are doing. We have to say why we are doing something. Once we know the motivation behind the ‘why,’ it creates an incentive to follow through with the plan.
Shun open wallet policy
Give them a certain amount of money and tell them to buy whatever they required at the store. if they are crossing that money tell them that you are saving the money for future plans, and stick with this budget.
Give him small change
Avoid giving notes of large denominations, rather give him change so that he can spend small amounts. Keep a record of money received, money spent, and money saved.
Use admiration and hard love
Use a combination of praise and tough love to instill monetary discipline in your family. “praise your kids for every penny saved,” she advises. That is, every time your kid makes a deposit I his or her piggy bank or custodial bank account, give verbal praise.
Use age-appropriate spending and saving apps
You use apps for everything else these days. Why not at home financial education. There are too many legitimate financial apps for kids to name. choose as per your own calculation.
Follow 1-1-1 method
The 1-1-1 rule for saving, spending, and giving. Encourage your son to put my money he receives – gifts or earned – into three equal buckets: spending, savings, and giving, ”is a great way to develop financial discipline and help them understand that all of their money should not be spent right away.
Open a custodial bank account for the early
Once you trust your kids enough to make their own spending and saving decisions without the aid of a piggy bank, open a custodial bank account in their name.
To avoid struggling
Kids struggling with basic financial management concepts well into high school and college because their parents never bothered to set up a checking account in their names. “teaching kids to manage a checking account early avoid these pitfalls in the future.”
Get them excited about money management
Allow their children to select the charitable organization. You’d be amazed at the amount of time and energy children put into his project. It’s a great way for children to start thinking about others and the good work many charities do in your community.
Teach them about taxes and accounting
If you use a human accountant to prepare your household’s taxes, take your child to this year’s appointment. If you prepare your taxes online, sit down with your kid and show him or her how the process works.
Involve them in grown-up money decisions
As your kids get older, involve them in grown-up financial choices without using their input as the last word for any consequential decisions, of course.
Encourage them to apply for scholarships
The case for higher education scholarships has never been clearer. For parents and students, every scholarship is a win-win proposition. This exercise not only motives students to work harder for scholarships and realize a monetary value for the study time.
Open a brokerage account for them
If your children are interested in investing, open a brokerage account and let them pick a few stocks to purchase. Encourage them to research the companies and see how the market affects performance over time.
Help them a budget and apply for student loans
Though its likely to be among your kids’ least favorite financial exercises, applying for student loans and budgeting for post-graduation repayments is a piece of the financial education puzzle. Kids who aren’t prepared to set aside significant chunks of their take-home pay for student debt simply aren’t set up for frugal-living success.
Use piggy banks
When your kids really want the latest and greatest toy or a new action figure, let them know they will have to save up for it. Give them a piggy bank for each of their desired purchases and offer them a small allowance each week in a denomination that encourages savings.
Teach them the 3 types of personal savings
Before they leave the nest, make sure your kids understand the three main types of savings: personal, emergency, and retirement. Give then an overview of each type of savings, what it’s for when to contribute, and when to draw upon.
Teach them a danger of credit cards
As soon as your kids turn 18, they will get hounded by credit card offers – especially once they are in college. If you haven’t taught them why debt is a bad idea, they will become yet another credit card victim. Remember it’s up to you to determine the right time you will teach them these principles.
Help them figure out how to make money
When you think about it, teenagers have plenty of free time – fall break, summer break, winter break, spring break. If your teen wants some money (and what teen doesn’t), then help them find a job. Better yet, help them become an entrepreneur! These days, its easier than ever for your teen to start up their own business and turn a profit.
Stress the importance of giving
Once they start making a little money, be sure you teach them about giving. They can pick a charity or even someone they know who needs a little help. Eventually, they will see how giving doesn’t just affect the people they give to, but the giver as well.
However, you choose to teach your kids to save, never forget that it’s in your financial interest to ensure that they know how to manage and grow their own money for years to come.